Ladies and gentlemen, at this time I'd like to welcome everyone to the Resideo Third Quarter 2024 Earnings. Today's call is being recorded. All participants will be in a listen-only mode until the formal question-and-answer portion of the call. It is now my pleasure to turn today's call over to Mr. Jason Willey, Vice President of Investor Relations. Mr. Willey, you may now begin.

Good afternoon, everyone and thank you for joining us for Resideo's third quarter 2024 earnings call. On today's call will be Jay Geldmacher, Resideo's Chief Executive Officer; Mike Carlet, our Chief Financial Officer; Rob Aarnes, President of Resideo's ADI Global Distribution business; and Tom Surran, President of our Products and Solutions business. A copy of our earnings release and related presentation materials are available on the Investor Relations page of our website at investors.resideo.com. We would like to remind you that this afternoon's presentation contains forward-looking statements. Statements other than historical facts made during this call may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in Resideo's filings with the Securities and Exchange Commission. The company assumes no obligation to update any such forward-looking statements. We identify the principal risks and uncertainties that affect our performance in our annual report on Form 10-K and other SEC filings. With that, I will turn the call over to Jay.

Thank you, Jason and thanks to everyone for joining us today. I'm pleased to report strong third quarter results, including organic growth from both Products and Solutions and ADI. We executed well on our key strategic initiatives and new product introductions across the business. Both Products and Solutions and ADI generated mid-single-digit year-over-year organic revenue growth in the quarter, not including the impacts of the divestiture of Genesis and the acquisition of Snap One. This is the first quarter both segments achieved year-over-year organic revenue growth since the second quarter of 2022. Our business achieved this growth in a mixed global macro backdrop. Though there are a number of positive indicators such as improving interest rate environment and an uptick in new home sales in the United States, there are still some market headwinds such as continued softness in the existing home sales in the United States and weakness in the EMEA market. Total company gross margin expanded by almost 200 basis points year-over-year, driven by the continued gross margin expansion in Products and Solutions and the positive contribution from Snap One within ADI. And we finished the quarter with total adjusted EBITDA of $190 million, up 29% year-over-year, delivering profitability above the high end of our outlook range. I am pleased with the team's efforts in the quarter. Before I hand it off to Tom and Rob to speak more about the underlying drivers in their businesses, I want to call out 2 items that I'm particularly excited about. First, the integration of Snap One into ADI is advancing very nicely. We've made good progress on our synergy efforts with a focus on melding our cultures while reducing redundant expenses. We continue to target $75 million of annual run rate synergies exiting 2026 and are well on track to achieve $12 million of synergies in 2024. Second, we are seeing momentum with our new offerings from Products and Solutions in the market, starting with our Focus Pro series of thermostats. This is consistent with our ongoing focus to introduce a regular cadence of new products and drive future innovation in key categories. Let me now turn the call over to Tom, who will provide additional details on the third quarter and around exciting new product pipeline the Products and Solutions team is executing on.

Thanks, Jay. The third quarter was another quarter of strong execution and meaningful progress, particularly with new product introductions within Products and Solutions. Organic revenue growth was 4%, driven by record sales in the retail channel and expansion in both the electrical distribution and HVAC channels. Inventory levels of our products within the key North American HVAC distribution channel are healthy. Sales of our First Alert smoke and carbon monoxide products continued to be strong during the quarter. Our First Alert safety products which have successfully transitioned to the UL 8th edition standard, recorded a fourth consecutive quarter of double-digit revenue growth. This standard offers real value to consumers with reduced nuisance alarms and advanced detection of the combustion of synthetic materials such as polyurethane. First Alert product sales growth was broad-based across 3 of our channels. Sales of our BRK branded product to professionals through our electrical distribution partners were strong. We continue to expand our homebuilder relationships in part due to the strength of our BRK product line. And we reported our best quarter ever of retail sales, driven by increased sales of our safety products through our retail partners, including Lowe's, Ace Hardware and Costco. Product and Solutions gross margin was 42.2% in the third quarter, up 350 basis points year-over-year. This was our sixth consecutive quarter of year-over-year gross margin expansion and was primarily driven by structural improvements that achieved operational efficiency. As Jay mentioned, we began taking orders during the quarter for the first new product in the refresh of our thermostat portfolio. The Honeywell Home Focus Pro line are our refreshed entry-level thermostat products for the professional market. Included in the release products were the N100, a nonprogrammable thermostat; the P100, a programmable thermostat; and the S200, an ENERGY STAR certified connected thermostat that…

Thanks, Tom. ADI reported 31% year-over-year sales growth in the third quarter and 4% growth on an organic basis. All of my following remarks on growth year-over-year represent organic business activities and do not include the impact of Snap One acquisition. Year-over-year revenue growth was driven by strength across all key commercial categories and with large customers, resulting in the strongest daily sales average in ADI's history. Our team is focused on carrying this Q3 performance forward to finish the year strong. From a category perspective, we saw the greatest sales acceleration in the commercial categories of professional audiovisual and networking. This trend supports our continued expansion into our growth verticals of ProAV and Datacom. We also saw our largest category, video surveillance, return to year-over-year growth. Such growth was partially offset by residential audiovisual headwinds. In Q3, we also continued to drive progress on key strategic initiatives around both our digital platform and our exclusive brands. ADI e-commerce sales grew 18% year-over-year. Our investments around omnichannel and improved website user experience continue to drive increased customer adoption. We are launching additional technology enhancements in the fourth quarter, including the integration of a leading AI search technology to aid product discovery and an improved user experience. Exclusive brand sales grew 32% year-over-year. In Q3, across our expanded portfolio, we launched key new product introductions that were well received by our customers, including Control4 integration of Apple Music, delivering a long requested feature enhancement to the platform; enhancements to our access networks networking products; earning CE Pro's Best Product Award for 2024; and delivering new WattBox solutions for power management focused on the ProAV market that received Best in Show recognition at InfoComm 2024. We believe our strength will continue with the large exclusive brand portfolio we can now offer as…

Thanks, Rob. Good afternoon, everyone. Third quarter consolidated financial performance was strong across the business with mid-single-digit organic sales growth, continued gross margin expansion, improved profitability and free cash flow and adjusted EBITDA above the high end of our outlook range. Third quarter total company reported revenue of $1.83 billion was up 18% year-over-year and up 4% on an organic basis. Adjusted EBITDA was $190 million, up 29% as compared to $147 million in Q3 2023. Third quarter fully diluted adjusted earnings per share was $0.58 compared with $0.55 in the prior year and operating cash flow was again strong at $147 million. Turning to Products and Solutions. Third quarter revenue of $645 million was up 4% organically and declined by 1% on a reported basis. Products and Solutions gross margin was 42.2%, up 350 basis points compared to last year and as Tom said, represents the sixth consecutive quarter of year-over-year margin expansion. Pricing realization continued across substantially all product categories. Volumes increased modestly year-over-year, driven by strength in the North American HVAC and the First Alert Safety product portfolios. This was partially offset by EMEA, where conditions continue to be challenging with lower volumes for gas combustion and heat pump products and continued headwinds in security. We continue to see Products and Solutions gross margin expansion opportunities primarily via efficiency, though we anticipate the recent pace of gross margin expansion to slow until additional new products are introduced in 2025. Products and Solutions' third quarter operating expense was down $15 million year-over-year, reflecting lower restructuring costs and effective control of ongoing operating costs. Adjusted EBITDA was up $17 million year-over-year to $157 million, with adjusted EBITDA margin expanding by 290 basis points to 24.3%. Turning to ADI; Q3 revenue was $1.18 billion. Excluding the $251 million of Snap…

Thank you, Mike. This was a significant quarter for Resideo with year-over-year growth across both Products and Solutions and ADI, strong cash flow generation and notable progress in our new product introduction efforts. We are encouraged by the early success of product launches, pipeline developments and the integration of Snap One. I'd like to thank the team for their continued strong execution and cost discipline which is driving momentum as we close out a successful 2024. I want to make a final comment before we turn to Q&A. Today, I announced my intention to retire as CEO of Resideo in 2025. I will continue to serve as the CEO of Resideo until a successor is appointed and plan to remain with the company as a senior adviser to ensure a smooth transition. I'd like to congratulate Andy on his appointment as Board Chair and thank Andy and Roger for their partnership and leadership on the Board. It's been my privilege to lead the company for the last 4.5 years. I've been enriched by exceptional colleagues from around the world and I make my decision with gratitude for all we have accomplished together. That includes refocusing our product portfolio and accelerating new product introduction, improving the financial profile and executing on 2 transformational acquisitions, all of which results in Resideo being better positioned for future revenue and earnings growth. I have 2 primary objectives in the coming quarters. First, I intend to continue executing against Resideo's business strategy because it's important to me that our next leader inherit this business with momentum. Second, I plan to work closely with our Board of Directors and my successor once named to ensure a smooth transition. My excitement for our company is as strong as ever and I'm confident in its bright future. With that, let's open the call up for Q&A.

[Operator Instructions] Your first question today comes from the line of Erik Woodring with Morgan Stanley.

Jay, obviously, congrats on the announcement but you're not done with us yet. So I'll save those for when a successor is appointed. I would love to maybe just pick your brain on just kind of -- you've obviously -- you came in during very tough times. You had stated goals here when you joined along with Tony. And I think you did a lot of that, right, breaking down silos, really focusing on margins and you're seeing that play out. What kind of leader do you think Resideo needs for this next phase of its journey? What are you looking for in that next operator? And then I have a follow-up, please.

Thanks, Erik. Thanks for your comments and good question. I mentioned in my comments before we started Q&A about I want to make sure that in making this move and transition with me retiring next year that the company is in a really good spot. So it's the next chapter of the book, as I like to call it, because we've done a lot of good things and I'm really proud of in those 4.5 years. And as you stated, when I came in 4.5 years ago, there was a lot of challenges with the business. It's actually one of the reasons why I took the job because I saw the potential of what this company could be. And we've progressed a long way, as I highlighted in my comments. And now I think we're really poised for really a wonderful future ahead and to be able to drive further growth, profitability and I just think it's a great time for when the new leader is picked, that he or she could then leverage off that and continue the trajectory of what we've done, not to worry about some of the things we had to worry about 4.5 years ago and focus on what we can do to grow both top line and bottom line.

Okay. That's helpful. I appreciate kind of that early look and look forward to the next developments there. Maybe, Rob, I'd love to pick your brain too, just your comments on ADI stood out to me, right? Best daily sales ever, exclusive brands up over 30% year-over-year, e-commerce up almost 20%, none of that including Snap One. Can you just help us understand kind of what's going on behind the scenes? Because obviously, not too long ago, this business was declining year-over-year. So what's happening in the market that's really changing? And how sustainable is that momentum? And if you could just feed in kind of why that isn't translating into better margins? I know you talked about competition and kind of inflation pricing going away. But just help us understand why if the kind of underlying demand backdrop is so strong? Why you can't capture that pricing? But other than that, that's it for me.

Yes. Erik, thank you. Great question. There was a lot there. So let me try and pick it apart a few different ways. So if you remember from Q2, we talked about continuing momentum, right, every month of the quarter, April, May and June, with specific momentum in our commercial categories. And then, we actually saw that continue up and to the right in the third quarter. And as my prepared remarks said, I talked about the fact that we saw a lot of that growth coming from our large national accounts which was really, really good to see those guys really coming back to some fairly strong growth. And they play in a number of different verticals, right which we saw continue to accelerate throughout the quarter with verticals like banking, retail, large entertainment venues, education and government. And really, we saw the pipeline, the project -- large project pipeline grow throughout the second quarter, throughout the third quarter. And as I also mentioned in my comments, we continue to see that. We expect that momentum to continue into the fourth quarter. So that's how I would talk about it. That's how I would kind of justify the organic growth. In terms of what we're seeing on exclusive brands, our DX e-commerce business. This is something we have been talking about for quite some time. It's an area we started to invest in 2, 3 years ago, especially on the e-commerce front. And we're now to the point where if you take Snap out of the equation, look at our exclusive brands line. We're launching over 200 new products a year across all of our categories. That's driving a lot of that growth; that's part one. And then on the DX side, we made some significant advancements this year in the user experience, one, along the lines of speed. You heard me talk about our AR search capability that actually just launched last night and we're already starting to see some great progress there. So it's not -- the growth in these areas haven't been overnight. They're the result of the investments we've been making here over the last few years that are finally coming to fruition for us in kind of concert with some of the pickup in some of the commercial sectors that we're seeing as well.

Your next question comes from the line of Chan Park with Evercore.

This is Chan, on for Amit. Jay, I just wanted to echo the congrats on your announced retirement. I just had one on SG&A. I think it came in a little higher than what we were anticipating. I just wanted to understand the cadence on some of the OpEx targets that you mentioned before, where we should expect these to show up going forward? Any color on that would be super helpful.

Chan, thanks for the call. It's Mike. Yes, there was a couple of unusual onetime things in SG&A at P&S this quarter that inflated a little bit by single-digit millions. So it did come in a bit higher than we expected. That shouldn't be a trend. We should see that return to more normal levels on a go-forward basis. So nothing systemic in there but it was a bit higher on that side due to some onetime events.

Got it. And then just as a follow-up on margins, on gross margins, you talked on the expansion on the product side, the expansion there abating going forward until new programs or products ramp in '25 and some pricing headwinds in the ADI business. How should we think about margins in 2025? And should we expect this to be back half loaded as products ramp? Or what are the offsets that can make this more linear as the year goes?

Yes. So we haven't got our 2025 guide out yet, obviously. We're still positive about the momentum in the business. We still think there's lots of opportunity for future gross margin accretion at the P&S side. Clearly, as we think about the new product introduction, that will continue to drive it forward. But when we get to the exact timing, we'll make sure we get the guidance out there appropriately.

This concludes our Q&A. At this time, I turn the call back to Jason Willey for closing remarks.

Thank you everyone for participating today, and as always, if you have any additional questions please feel to reach out. Have a good rest of your day. Thank you very much.

This concludes today's call. You may now disconnect.